London house prices fall for first time in eight years

House prices in London have fallen for the first time since 2009 and prices across Britain overall rose at their slowest pace in more than four years in September, mortgage lender Nationwide said on Friday.

In a latest sign of the slowdown in Britain’s housing market since last year’s Brexit vote, Nationwide said prices in London fell by an annual 0.6 per cent this month.

House prices in London have dropped since Brexit. Photo: Simon Dawson

The British capital – which has attracted property investors around the world – represented the weakest performing region in the country for the first time since 2005.

Nationally, Nationwide said house prices rose 2.0 per cent year-on-year in September, slowing slightly from a rise of 2.1 per cent in August and the weakest increase since June 2013.

A Reuters poll of economists had pointed to annual growth of 1.9 per cent for house prices across Britain.

Nationwide said pressure on household incomes, caused by rising inflation and slow wage growth, was cancelling out some of the support for the market from rock-bottom interest rates.

The Bank of England is widely expected to raise rates soon, possibly as soon as November 2 at its next policy meeting. But Nationwide said a modest rise by the BoE would probably have only a small impact.

«This is partly because the proportion of borrowers directly impacted will be smaller than in the past. In recent years the vast majority of new mortgages have been extended on fixed interest rates,» the lender’s chief economist Robert Gardner said.

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UK house prices were rising by more than 5 per cent a year at the time of last year’s referendum decision by voters to leave the European Union, according to Nationwide’s index, almost three times the current pace of growth.

In month-on-month terms, British house prices rose by 0.2 per cent in September after falling by 0.1 per cent in August.